WASHINGTON – The United States has seized more than $6 million worth of cryptocurrency from perpetrators based overseas, according to an announcement by U.S. Attorney for the District of Columbia Matthew M. Graves, U.S. Attorney for the Eastern District of Tennessee Francis M. Hamilton III, Principal Deputy Assistant Attorney General Nicole M. Argentieri, and FBI Special Agent in Charge Joseph E. Carrico of the Knoxville Division.
The perpetrators, located in Southeast Asia, fraudulently obtained millions of dollars’ worth of cryptocurrency from individuals in the United States through a cryptocurrency confidence investment scheme. The FBI traced the victim funds on the blockchain and identified multiple cryptocurrency wallet addresses holding over $6 million in victim funds.
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Cryptocurrency confidence investment schemes often start with criminals contacting potential victims through misdirected text messages, dating apps, or professional meetup or investment groups. The criminals then gain the victim’s trust and affection before recommending a cryptocurrency investment, often touting their own or an associate’s success. A common tactic involves directing the victim to a fake investment platform on a website that mimics legitimate platforms. The victim is assisted in opening a cryptocurrency account on a U.S.-based exchange and transferring money from their bank account to the cryptocurrency account. Subsequently, the victim is instructed to transfer their cryptocurrency assets to the fake investment platform.
These fraudulent platforms often display lucrative returns, encouraging further investment. Initially, victims may be allowed to withdraw some “profits” to build trust. However, as the scheme progresses, victims are unable to withdraw their funds and are given various excuses. Eventually, victims are locked out of their accounts and lose all their funds.
“In these scams, fraudsters trick U.S. citizens into believing they are transferring funds to cryptocurrency investment opportunities when, in fact, they are just unwittingly turning their money over to the fraudsters,” said U.S. Attorney Graves. “The fact these fraudsters and their accounts are typically located outside the United States will not stop us or our partners at the FBI from doing all we can to recover the proceeds of these frauds and to hold the people running them accountable.”
“Investment scams and schemes are not new, but committing fraud with digital currency presents new challenges for law enforcement attempting to recover lost funds,” said Special Agent in Charge Carrico. “The FBI along with our law enforcement partners will continue to investigate allegations of crypto scams, but the best defense is to educate yourself before making any investment. Remember, if it sounds too good to be true, it probably is.”
According to data submitted to the FBI’s Internet Crime Complaint Center (https://www.ic3.gov/) in 2022, perpetrators of these schemes targeted tens of thousands of victims in the United States, resulting in over two billion dollars in private assets being siphoned overseas. The loss amount reported in IC3 complaints involving cryptocurrency increased by 45% since 2022, from more than $3.8 billion to over $5.6 billion in 2023.
The FBI Knoxville Division is investigating the case, with assistance from the Justice Department’s Office of International Affairs and FBI’s Virtual Asset Unit. The Department of Justice acknowledges Tether for its assistance in effectuating the transfer of these assets. The case is being prosecuted by Assistant U.S. Attorneys Kevin Rosenberg and Rick Blaylock Jr. of the District of Columbia, Assistant U.S. Attorney Joseph DeGaetano of the Eastern District of Tennessee, and Trial Attorney Stefanie Schwartz from the National Cryptocurrency Enforcement Team with the Computer Crime and Intellectual Property Section of the Department of Justice.
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